Yahoo Finance UK Health App Babylon Plans Job Cuts in Bid to Slash Costs
(Bloomberg) -- Health tech company Babylon Holdings Ltd. is in talks to cut about 100 jobs across its global business as part of a plan to reduce costs and become profitable, people familiar with the matter said.
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Babylon said on Wednesday it intends to slash costs by $100 million during the third quarter of this year to “accelerate its path to profitability,” but hadn’t specified how it would impact jobs. The company averaged 2,572 employees in 2021, according to a regulatory filing.
Shares in the company, which connects patients with doctors via an app, rallied after Wednesday’s announcement. Babylon reported an operating loss of $402.5 million for 2021 but grew its annual revenue fourfold to $323 million.
“Like many other responsible organizations at these times of change, we are focusing our resources on activities that most directly serve our mission, and that means some reduction in non-core activities,” Babylon spokeswoman Marnie Maton said in statement responding to Bloomberg. “We are not reducing any patient-facing clinicians in Rwanda, the UK or US.”
The teams affected by the changes have been notified, Maton said, but individuals won’t know if they have been impacted or whether they have been moved into new roles until a consultation period is completed -- 45 days, in the UK.
Some employees working for the company in the US have already been given a week’s notice, according to two people familiar with the matter who were not authorized to speak publicly. Those employees were told they could keep their laptops as a gift, said one of the people.
The potential cuts at Babylon could impact about 100 Babylon employees in the UK and US, including from the clinical safety and compliance teams.
Babylon isn’t alone in trimming costs: Health tech startups including Sensyne and Carbon Health are cutting staff amid economic uncertainty. Sky News first reported on the Sensyne cuts.
Founded in 2013, Babylon’s app allows patients to schedule a video call with a doctor or other specialist, including physiotherapists, and check symptoms. The company works with the UK’s National Health service to provide mobile consultations to patients as their official primary care provider through its “GP in Hand” service.
In June 2018, Babylon Chief Executive Ali Parsa showcased a chatbot that he said could diagnose conditions using a probability score based on a patient’s stated symptoms. During the demonstration, which took place on stage at the Royal College of Physicians, Parsa also claimed the company’s AI could beat human doctors in the Membership of the Royal College of General Practitioners exam, the standard test for GPs in the UK.
Medical professionals criticized Babylon’s claims.
“No app or algorithm will be able to do what a GP does,” said Professor Martin Marshall, Vice Chair of The Royal College of General Practitioners in a statement after the June 2018 event.
Babylon has since tempered its offering, positioning itself as an app-based doctor service and automated symptom checker as opposed to a provider of AI-powered medical diagnosis. In order for a company to advertise their products as diagnostic tools they must get regulatory approval, which Babylon has not yet obtained.
In October 2021, the company went public on the New York Stock Exchange via a merger with Alkuri, a special purpose acquisition company run by former Groupon Inc. executives, with an implied equity value for Babylon of about $4.2 billion. Since then, its market capitalization has fallen more than 90%, giving the company a market value of about $334 million.
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